Retailing Wholesaling

					Retailing and Wholesaling
Chapter 14

Objectives
• Understand the roles of retailers and wholesalers in the marketing channel.
• Know the major types of retailers.

• Know the major types of wholesalers.
• Understand the marketing decisions facing retailers and wholesalers.

14 - 1

Case Study
Home Depot
• Huge product assortment • Prices are 20% – 30% below hardware stores • Obsessed with offering high quality customer service • Lifetime value of customers: $25,000 • Well-trained, highly motivated salespeople earn above average salaries • Customer problem solving is encouraged • Internet site offers many home improvement tips • One of today’s most successful retailers
14 - 2

Definitions
• Retailing
 All activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use.

• Retailer
 Business whose sales come primarily from retailing.
14 - 3

Retailing
Types of Retailers
• Specialty Stores • Discount Stores

• Department Stores
• Supermarkets

• Convenience Stores
• Off-Price Retailers

• Superstores
14 - 4

Retailing
Retailers Are Classified By:
• Amount of service • Product lines • Relative prices • Organizational approach
• Self-service retailers
 Customers are willing to self-serve to save money  Discount stores

• Limited-service retailers
 Most department stores

• Full-service retailers
 Salespeople assist customers in every aspect of shopping experience  High-end department stores  Specialty stores
14 - 5

Retailing
Retailers Are Classified By:
• Amount of service
• Product lines • Relative prices
• Specialty stores
 Narrow product lines with deep assortments

• Department stores
 Wide variety of product lines

• Supermarkets • Convenience stores
 Limited line

• Superstores
 Food, nonfood, and services

• Organizational approach

• Category killers
 Giant specialty stores
14 - 6

Retailing
Retailers Are Classified By:
• Amount of service
• Product lines • Relative prices
• Discount stores
 Low margins are offset by high volume

• Off-price retailers
 Independent off-price retailers


TJ Maxx, Marshall’s

 Factory outlets


• Organizational approach

Levi Strauss, Reebok
Sam’s Club, Costco
14 - 7

 Warehouse clubs


Retailing
Retailers Are Classified By:
• Amount of service
• Corporate chain stores
 Commonly owned / controlled

• Voluntary chains
 Wholesaler-sponsored groups of independent retailers

• Retailer cooperatives
 Groups of independent retailers who buy in bulk

• Product lines
• Relative prices • Organizational approach

• Franchise organizations
 Based on something unique

• Merchandising conglomerates
 Diversified retailing lines and forms under central ownership

14 - 8

Retailing
• Retailer Marketing Decisions
 Target marketing and positioning  Product assortment, service mix, store’s atmosphere  Price  Promotion  Place (location)
14 - 9

Retailing
• The Future of Retailing
 New retail forms and shortening retail life cycles


Wheel-of-retailing concept

 Growth of nonstore retailing


Mail-order, television, phone, online shopping

 Retail convergence
14 - 10

Retailing
• The Future of Retailing
 Rise of megaretailers  Growing importance of retail technology  Global expansion of major retailers  Retail stores as “Communities” or “Hangouts”
14 - 11

Definitions
• Wholesaling
 All activities involved in selling goods and services to those buying for resale or business use.

• Wholesaling
 A firm engaged primarily in wholesaling activity.
14 - 12

Wholesaling
• Wholesalers add value by performing the following functions:
 Selling and promoting  Buying and assortment building  Bulk-breaking  Warehousing  Transportation
14 - 13

Wholesaling
• Wholesalers add value by performing the following functions:
 Financing  Risk bearing  Marketing information  Management services and advice
14 - 14

Wholesaling
Types of Wholesalers
• Merchant Wholesalers • Brokers and Agents • Manufacturers’ and retailers’ branches and offices
• Full-service wholesalers
 Wholesale merchants  Industrial distributors

• Limited-service wholesalers
      Cash-and-carry wholesalers Truck wholesalers (jobbers) Drop shippers Rack jobbers Producer’s cooperatives Mail-order wholesalers
14 - 15

Wholesaling
Types of Wholesalers
• Merchant Wholesalers • Brokers and Agents • Manufacturers’ and retailers’ branches and offices
• Brokers
 Bring buyers and sellers together and assist in negotiation

• Agents
    Manufacturers’ agents Selling agents Purchasing agents Commission merchants

14 - 16

Wholesaling
Types of Wholesalers
• Merchant Wholesalers • Brokers and Agents • Manufacturers’ and retailers’ branches and offices
• Sales branches and offices
 Branches carry inventory: lumber, auto equipment, parts  Offices do not carry inventory: dry goods

• Purchasing officers
 Perform roles similar to brokers and agents, however these individuals are employees of the organization

14 - 17

Wholesaling
• Wholesaler Marketing Decisions
 Target market and positioning
 Targeting

may be made on the basis of size of customer, type of retailer, need for service.

 Marketing mix decisions
 Product

and service assortment: inventory, line  Pricing: usual markup on COG is 20%  Promotion: largely disorganized and unplanned  Place: location, facilities
14 - 18

Wholesaling
• Trends in Wholesaling
 Price competition is still intense  Successful wholesalers must add value by increasing efficiency and effectiveness  The distinction between large retailers and wholesalers continues to blur  More services will be provided to retailers  Many wholesalers are going global
14 - 19


				
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posted:6/26/2009
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